December 4, 2023 at 7:30 AM - Facility Committee Meeting

Description:  The purpose of this agenda item is to discuss the topic of 2024 bond proceeds management. Regarding the November 2022 referendum, the school board has approved borrowings for $9.9 million and $99 million of the $175 million approved by the voters. There are different federal requirements that apply to each of the above borrowings. This discussion will focus on the $99 million bond issue. Attached please find documentation on this topic from our financial advisor PMA.

The attached document estimates interest earnings of $5 million from the investments related to the $99 million bond issue. The district, working with our financial partners (PMA and OCB), has successfully invested the funds since January of 2023 to maximize interest earnings. The budget committee made a recommendation to the board in February 2023 regarding our investment strategy. 

Our interest earnings could exceed what is allowed by the IRS. The IRS requires specific spending targets in order to retain all interest earnings when said earnings exceed the rate of borrowing for the bond issue. In our case, the estimated interest earned is $5 million and the estimated maximum allowed is $3.6 million, unless the spending targets have been met. The spending targets are as follows for the $99 million bond issue:
25% by August 1, 2023 (have met this requirement)
50% by February 1, 2024 (on track to meet this requirement)
75% by August 1, 2024 (behind schedule to meet this requirement)
100% by February 1, 2025 (behind schedule to meet this requirement)
We are seeking board member feedback on 3 potential paths for planning in 2024:
1) Seek lower rate of return investments to reduce overall interest earnings. (Ex: tax-free municipal bonds)
2) Continue current investment plan and spending plan with the understanding we will not meet the 75% and 100% spend down requirements and will need to return $1.4 million in interest earnings to the IRS. 
3) Continue current investment plan and accelerate our spending plan with a goal of meeting the 75% and 100% spend down requirements. If this approach is preferred, administration will need to present capital maintenance expenditures of a significantly larger scale over the next couple of months. We will also have to work with Vogel Bros. to seek opportunities to lock in costs for middle school supplies, materials, equipment, etc. 
We look forward to hearing your feedback on this topic. 

Description:  The purpose of this agenda item is to review the federal energy efficiency programs that are available in 2024. Attached please find information on both the Energy Policy Act of 2005 (179D) and the Inflation Reduction Act from August 2022 (Direct Pay). 

This discussion is directly related to the prior discussion. In the event there is an interest in following path 3 from above, energy efficiency projects will be a significant component of our approach. Our total utility spending in the last 3 years is as follows:
2020-2021: $1,042,198.91
2021-2022: $1,278,471.00
2022-2023: $1,309,499.15
Total utility spend is a function of several factors including weather, cost of the energy, and amount of usage. A good comparison to make is our utility expenditures compared to similar organizations. We can make this comparison through Frontline Comparative Analytics. Our overall educational expenses are the 3rd lowest among comparable Dane County districts. However, our utility expenditures rank 4th highest when compared to those same districts. Please see the attachment.

Utility expenditures will improve in 24-25 because of the replacement of the Heritage complex with a new energy efficient Heritage Elementary. Annual savings are estimated to be $30,000 to $40,000. Our largest expenditure in the utility category is electrical costs. Outside of specific targeted projects, the district has not invested in modern energy efficient lighting throughout our older facilities. 

Attached please find initial proposals from Westphal on updating the lighting at Prairie Elementary and the High School to modern lighting systems.  We will also need proposals for the Middle School and Arboretum. 

Energy efficiency projects will have multiple benefits in 2024:
1) Reducing utility expenditures in fund 10
2) Improved classroom lighting throughout all 4 older facilities
3) Opportunity to pursue both state and federal energy efficiency incentives
4) Environmental impact of reduced energy usage

Administration is not requesting approval of these projects at the December meeting. If there is interest by the board, administration will vet these projects out for compliance with applicable state and federal incentive programs prior to seeking approval. Administration will be requesting feedback from the budget committee on the professional partnerships necessary for this work (legal and accounting).

In addition to energy efficient lighting projects, other projects like solar systems, HVAC systems, and EV charging systems are also eligible for these federal incentive programs. The new Heritage Elementary design includes a geothermal system, a solar system, and EV charging stations for both district and staff/public use. Administration will also be pursuing all available federal incentives for our energy efficiency efforts at the new Heritage Elementary school. 

Regarding EV charging stations, the district will need to have a policy regarding our approach to electric vehicles not belonging to the district (staff, visitors, general community use). We are seeking board member feedback regarding the best approach to create a district policy for these EV charging stations. 

Description:  The purpose of this agenda item is to provide an update on the schedule and finances for the Heritage Elementary School project. Attached please find the updated financial report related to contingency funds and change orders. Administration will provide a verbal update on the project schedule. 

Description:  The purpose of this agenda item is to provide an update on capital projects, and request consideration of additional capital projects for HVAC and districtwide maintenance.

Attached please find our budget tracking document for capital projects. Please note that this document has been updated to reflect the October School Board meeting capital projects approvals, and the GMP savings for Heritage Elementary School. Administration will review this budget tracking document before reviewing the potential additional capital projects. 

Description:  The purpose of this agenda item is to review an HVAC project proposal from NAMI. The attached proposal is related to the software system/equipment that operates the controls for all district HVAC systems. The current software system/equipment that operates the HVAC controls for the district is referred to as the Andover DDC system and this system is no longer being supported by the vendor. NAMI has shared this information with the district in the past, but we have decided to wait as long as possible before proceeding with a system change. 

A system change will be necessary in 2024, as the HVAC systems may not be able to operate in the event of equipment failure. NAMI has a limited ability to procure equipment that is operational with the Andover control system. The price of the attached proposal will increase by at least 3 percent on December 15th, so administration is requesting approval of this investment prior to the price increase. Administration is requesting approval of the front end system at this time (option 1), not the full system replacement option (option 2). The front end system replacement is what is required to keep the HVAC systems operational. The full system replacement option is not necessary at this time. 

Description:  The purpose of this agenda item is to have a discussion regarding the capital maintenance planning at the high school. Please see the attached document that provides updated estimates for projects that are being considered at the high school. 

The November 2020 referendum includes targeted work at the high school. This targeted work includes the bleachers (completed), pool changing area/restrooms, small auditorium, technical education classrooms, library furniture, large group space, and the TLC. EUA is currently working on the plans for the pool area, small auditorium, technical education classrooms, and the library furniture. Alongside this EUA work, the district maintenance team has been working closely with Vogel on prioritizing capital maintenance projects and updating estimates for the high school.  The budget for these high school capital maintenance projects would either be the maintenance projects portion of the referendum, or the interest earnings.  

No action is requested on these projects at this time. Administration welcomes any feedback from the committee members on this topic. 

Description:  The purpose of this agenda item is to request consideration of district wide maintenance projects. Attached please find an updated capital maintenance projects prioritization list. Administration is requesting approval of the projects highlighted in yellow. 

At the last Facility Committee meeting in October, the committee members indicated a willingness to consider additional district wide capital maintenance projects. The district maintenance team has been working since October to present the attached projects to the committee. The projects highlighted in yellow are requested for consideration this month, and administration will continue to review additional projects for consideration at future Facility Committee meetings.  

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